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How can bankruptcy give you a fresh start?

On Behalf of | May 16, 2023 | bankruptcy |

Friends or family who know you have money problems might steer you away from bankruptcy. They might say it will ruin your credit score, and you’ll never be able to get a loan, credit card or mortgage again. They are wrong, and the following is why.

Bankruptcy shows lenders you are taking responsibility

Everyone faces an insurmountable problem at some point in their life. What matters is how they respond. Do they bury their head in the sand, hoping for a miracle to save them, or do they hold up their hands and admit they need help? Filing for bankruptcy shows that you are facing up to your problems.

Your credit score can only get better once you file

Your bankruptcy will show on your credit report for seven years if you opt for a Chapter 13 filing and 10 years if you choose Chapter 7. That does not mean you cannot get loans or credit cards. It just means potential creditors will see you filed bankruptcy. Most people can rebuild their credit within a few years of filing bankruptcy.

If you don’t file for bankruptcy, your problems and credit score will probably worsen. All you may be doing is pushing your low point further back, but you still need to reach it sometime. What’s more, it’s easier to rebuild from a fairly bad score than from an very bad score, which is what you may need to do if you put it off.

Some lenders specialize in offering credit to people who’ve recently filed for bankruptcy. Once you’re able to obtain credit again, handling it responsibly will reflect positively on your credit score.

There’s a lot to understand when considering bankruptcy, but there is legal help available to learn more.